Has health technology assessment (HTA) for pharmaceuticals come to the United States? HTA is a complex investigation undertaken by government-designated bodies in many countries, to establish the incremental clinical and economic value of new drugs, devices, and procedures. HTA agencies are common across Europe and also exist in Australia, Canada, and Japan.^1-3 Their findings are used by payers to inform whether to cover the new technology and, if so, how much should be paid for it.⁴

In the last decade, some organizations in the U.S. have begun to offer assessments similar to European HTA agencies. So, is HTA for pharmaceuticals now being embraced in the U.S.? If so, who are the principals guiding its development, and what direction will it take in the future? To answer these questions, we identified and fleshed out possible pathways through extensive research and synthesis of publications and presentations of health care thought leaders.

The U.S. has never had a mandated or universally accepted HTA process. This is not to say the U.S. has no process for assessing the value of drugs as one form of HTA for pharmaceuticals has existed for decades. This is the review of drugs by Pharmacy & Therapeutics (P&T) Committees within health insurers and hospitals. P&T Committees assess each new drug, in terms of its affordability and value, before allowing coverage or setting the criteria for coverage.

As access to innovative and increasingly sophisticated drugs tightens and cost-sharing increases, interested stakeholders such as employers, clinicians, patient advocacy groups, and decision-makers in state and federal government are demanding more sophisticated reviews and have found some HTA organizations to be a venue to share their voice.^5-6 We use the term Pharmaceutical Value Assessment (PVA) in this commentary to capture the essence of HTA as it relates to pharmaceuticals. The last decade has witnessed the emergence or growing sophistication of PVA organizations in the U.S.⁷ In our study, we examined the role key stakeholders and market trends will play in shaping the growth of these PVA organizations.

A pioneering PVA organization, the Blue Cross Blue Shield Association Technology Evaluation Center (BCBSA TEC), was established in 1985 to meet the demand of subscriber health maintenance organizations for clinical analyses to satisfy utilization management. Subsequent PVA organizations formed to conduct clinical and sometimes economic and affordability analyses, including the network of Evidence-Based Practice Centers set up by the Agency for Healthcare Research and Quality (AHRQ) in 1997, and the Institute for Clinical and Economic Review (ICER) in 2006. Recently formed PVA organizations have a focus on helping payers and providers analyze affordability through the development of tools, with increased transparency and flexibility of inputs, like the Drug Abacus from Memorial Sloan Kettering in 2015.

Pharmaceutical Value Assessment

By the most generally accepted definition, PVA involves an evidence-based clinical evaluation and an appraisal of the value of a drug.⁸ A full-scope PVA includes a synthesis of available evidence including comparative effectiveness research (CER) to estimate budget impact and cost-effectiveness.^2,8 Full-scope PVAs are also appealing to decision makers since they can organize research into concise recommendations, especially as drug development continues toward precision-based therapies meant for smaller populations.

Figure 1. Comparison between single HTA markets and the U.S. market. The U.S. market has a short-term perspective, a result of employees and beneficiaries periodically shifting between insurers. This puts the onus of pharmaceutical value assessment on affordability. If affordability is satisfied in the U.S. market, there is minimal need to explore a drug economically. Outside of the U.S. in single payer markets, governments can act on cost/QALY thresholds determined by HTA bodies. As a result, economic assessment is conducted before affordability outside the U.S., with a long-term perspective. Click image to enlarge.

As compared to the long-term perspective of single HTA systems in some countries that often focus on longer term societal value along with budget impact, the U.S. approach to PVA seems to have a short-term perspective as a result of a fragmented⁹ and decentralized health system¹⁰ of employees and beneficiaries frequently shifting between insurers.^11-12 This puts the focus on the near-term affordability of a new pharmaceutical. If affordability is satisfied, there is minimal need to explore the long-term economic value of a pharmaceutical in the broader health care system (see Figure 1). Additionally, in the U.S., PVA methodologies and the offerings of PVA organizations may vary.¹⁰ Some intend to facilitate P&T committee decisions or to guide utilization management criteria, and others are meant to aid in contract negotiations or inform physician treatment guidelines-all of these while still focusing on near-term affordability versus the long-term economic value.

Market forces

The most important influences shaping the future of PVA in the U.S. come from the stakeholders who pay for pharmaceuticals. These include payers such as insurance companies or pharmacy benefit managers who manage expenditure on pharmaceuticals as well as the employers and government agencies who fund health insurance for most Americans. An increasingly important voice belongs to patients or their physician who make daily choices on whether one treatment is worth the incremental cost-sharing required when compared with another treatment. Ancillary stakeholders include patient advocates, health economics researchers, providers of data and analytics, as well as the media. Of course, established and emerging PVA organizations play the ultimate role by providing assessments based on their capabilities or the demands of their particular users.

Taking into account the viewpoints of these stakeholders leads to a distillation of the major forces that are shaping the future development of PVA: (1) the market-driven payer system, (2) the competing demands of various stakeholders, (3) the role of government, and (4) the sophistication of data analytics and technology (see Figure 2).

Figure 2. A distillation of the major forces shaping the future development of PVA. Select motivations, capabilities, and limitations of key stakeholders within the health care ecosystem are shown and coalesce into four major forces that will shape the future development of PVA. Click image to enlarge.

Market-driven payer system

The competitive market-driven U.S. payer system and liability considerations motivate payers to preserve control on coverage decisions and usage criteria for pharmaceuticals, as these can affect profitability and customer experience.^12-13 As long as a multi-payer health system exists with payers retaining coverage and expenditure control, it is likely that the role of an external PVA organization will be limited to offering supportive analyses and recommendations that feed into payers’ decision-making. Larger payers like United, Aetna, and Cigna, which have their own pharmacy benefit manager (PBM) services, currently are likely to continue to conduct their own assessments. However, others like regional independents may not have sufficient resources to devote solely to PVA or may not choose to undertake PVA for every high-cost drug set to go before their P&T committee.

Competing stakeholder demands

Commercial payers need to accommodate the competing (and often conflicting) demands of many stakeholders such as physicians and patients, as well as the employers who purchase health insurance and hold payers accountable. Our information age has increased the sophistication of stakeholder demands and payers now need more rigor in their decision process to withstand tough scrutiny.⁵ Employers are forming coalitions to press payers to assess value for money.¹⁴ As patients, physicians, and advocacy groups push for more patient-centric value discussions,¹⁵ PVA will need to include patient, family, and caregiver-borne costs in their analyses. This need for rigor, new perspectives, and citable references will increase payer reliance on PVA from unbiased external organizations.

Role of government

Government payers are assessing value in several ways, with the Veteran’s Health Administration (VHA) and states having the most autonomy to conduct or fund analyses that help their contracting negotiations. PVA within the VHA is advanced and trendsetting. The Military Health System has sophisticated PVA capabilities, but impact is limited to the system and TRICARE. In traditional Medicare, current statute does not permit treatments to be restricted based on cost or cost-effectiveness for beneficiaries. Commercial payers (and PBMs) managing government beneficiaries, including sponsors of standalone Part D plans, Medicare Advantage Part D (MAPD) plans, and Managed Medicaid Organizations are motivated by capped budgets to conduct PVA internally or consume external PVAs for their policy development and coverage decisions. States may be satisfied by their own P&T processes, publicly available PVAs, or PVAs requested from organizations like the Drug Effectiveness Review Project (DERP).

Government agencies have demonstrably moved away from technology assessment and head-to-head drug comparative effectiveness research (CER) for the general population. The Office of Technology Assessment was closed in 1995. The Federal Coordinating Council for Comparative Effectiveness Research was superseded by Patient-Centered Outcomes Research Institute (PCORI) in 2009 but is statutorily prohibited from imposing cost/quality-adjusted life-year thresholds, effectively preventing it from conducting PVA. AHRQ's Developing Evidence to Inform Decisions about Effectiveness (DEcIDE) network and Centers for Education and Research on Therapeutics (CERTs) program ended in 2014 and 2016.

Without legislative change, CER may have to suffice for the federal government,¹⁶ thereby placing more emphasis on states to act. Many states already control drug spending through price growth caps, biosimilar substitution, price and rebate transparency, and annual reports on drug spending.¹⁷ Additionally, legislators are careful to avoid concerns of rationing, denying effective care, threatening physicians’ autonomy, or blind cost containment. Based on these trends and current federal statute, the federal government is unlikely to mandate PVA for high-cost drugs, designate an official PVA organization, or charge an agency with conducting PVA. We do not anticipate that PCORI will advance to funding CEAs but will continue to invest in infrastructure to accelerate real-world evidence (RWE) generation, which may subsequently be used by other organizations for PVA.

Sophistication of data analytics & technology

The credibility needed for PVA in the future will require more rigorous data analysis than in the past, especially using RWE from a data set that closely mirrors a payer’s own demographics and clinical operations. Payers may demand analyses of their own patient data to project expenditure on new drugs and the economic benefit derived from them. The more expenditure a medication represents, the greater the potential savings from drug management and the greater the payer’s stake in a rigorous PVA. By their actions, federal agencies are focused on conducting CER within subpopulations and generating RWE through observational trials and pragmatic randomized clinical trials. Regulatory changes may facilitate an increase in value-based contracting (VBC), which would increase demand for outcomes benchmarks to enable such contracts. Finally, an increase in data availability and future standards for RWE, could mean that payers will expect PVA organizations to update their findings with RWE at some point after a drug is launched. For-profit companies and not-for-profit organizations that have access to real world data or the technology for sophisticated analysis will evolve stronger capabilities to play a key role in PVA.

The emergence of these trends, coupled with traditional stakeholder demands for support in assessing affordability, have caused the emergence of third-party PVA organizations that fall into three broad buckets: clinical assessors, tool providers and full-scope assessors (see Figure 3). Clinical assessors have long supported payer decision-making and have been recently joined by tool providers, creating transparent and customizable tools to help payers and providers analyze affordability. In the last decade, the need for an integrated clinical and economic appraisal has led to the birth of full-scope assessors, including the Medicaid-focused DERP and ICER.

Figure 3. Emergence of PVA organizations. PVA Organizations have recently emerged as tool providers in order to meet transparency and flexibility needs of stakeholders in determining pharmaceutical value. The provided examples are not an exhausted list, and organizations can be considered as more than one type of category. Click image to enlarge.

Scenario generation

A myriad of variables, including system trends, changing political environments, stakeholder demands, and growing PVA capabilities could shape the future of PVA into a number of possible scenarios within the next decade. We traced many pathways and analyzed their end scenarios using the evidence discussed above. Of these, the four most likely scenarios are presented to illustrate the range of possibilities PVA could take given the variables at play (see Figure 4). These scenarios are not mutually exclusive, and the most likely outcome will be a combination of individual elements belonging to different scenarios. The intention is to begin a broad-based discussion on how future trends and events could converge on an optimal scenario. Additional consideration was given to competitive, reactionary, or mandated events that could spin-off additional scenarios or create combinations of them. Each scenario is described in terms of the way stakeholders could shape the need for PVA and PVA organizations could develop capabilities and offerings.

Figure 4. Scenario analysis demonstrating the likely realm of future environmental possibilities. Given four different scenarios, it is predicted that multiple credible PVA organizations that provide a range of assessments and tools will develop to satisfy decision maker needs. Click image to enlarge.

Scenario 1: ICER Dominates

ICER, which is known as the independent watchdog on drug pricing,¹ is already the most visible PVA organization. Under this scenario, ICER comes to dominate the landscape of the future and continues to draw attention to high-cost drugs through its topic selection and announcement of resulting value-based price benchmarks. Additionally, it will set the standard for assessment methodology and payers and employer coalitions will rely on ICER’s value-based price benchmarks to negotiate lower prices for high-cost drugs. To achieve this, it would have to increase output as payers would expect it to cover the full range of new and existing pharmaceuticals. This would require significant funding, some of which may come from payers. However, ICER may also receive additional funding from pharmaceutical companies. Both sources of funding have the potential to cast a shadow on its impartiality. ICER would continue to invite stakeholder feedback and make small improvements to its methodologies but not substantially shift the focus of its assessments towards the patient perspective. Additionally, it may not be able to establish equal credibility in all disease areas. As such, it may leave certain gaps. New PVA organizations may emerge to fill these gaps but may not have as much credibility as ICER.

Scenario 2: Multiple PVA Bodies Emerge

In an alternative view, multiple PVA organizations with different expertise or disease focus rise to equal prominence. This could be advanced by a push for inclusion of the patient perspective and affordability analyses. It could also be advanced by employers’ demand that payers justify their formulary decisions with credible and methodologically appropriate PVA. Payers will then require frequent and readily available PVA as justifications for their decisions, creating demand for external PVA. Current tool provider PVA organizations could add or strengthen capabilities to fill these needs and new PVA organizations may emerge. Data analytics and RWE vendors could begin supplying services and products to full-scope PVA organizations or become tool provider PVA organizations themselves. Payers would adopt open source models and offerings from tool providers to supplement full-scope assessors who may only publish a handful of assessments each year.

Scenario 3: Value-based Contracting Changes Conversation

This scenario postulates that regulatory changes will enable unhindered VBC between pharmaceutical companies and payers, including commercial health insurance plans. For this to happen, government impediments to VBC, such as Medicaid Best Price, and the safe harbor for the Anti-Kickback statute, would need to be mitigated. Another possible driver might be the revival of a program like the Competitive Acquisition Program (CAP) for Medicare Part B drugs,¹⁸ since CAP vendors could facilitate the extra data capture and reporting required for indication-specific pricing.¹⁹ Pharmaceutical companies will be inclined to move away from discussions around unit prices and might prefer value-based or outcome-linked contracts. Employers would then expect payers to engage in such contracting. Payers accepting such contracts would look to PVA organizations to equip them by providing outcomes benchmarks for different indications of a high-cost drug. Increased data availability from payers and sites of care combined with a rise in those with analytical capabilities only increases the likelihood of this scenario. Custom measurement of outcomes and value directly within each payers’ population would further reduce the need for full-scope PVA organizations, which assess primarily based on the population reflected in clinical trials.

Scenario 4: Price Controls Reduce Need for PVA

The basis for PVA could also dissipate in response to effective price controls. Government directed price controls could mandate further drug discounts including direct discounts to patients,²⁰ limit price increases,²¹ or use external reference pricing on new drugs.²² In a simpler example, moving specialty drugs from Medicare Part B to D would allow for payer-negotiated discounts with less of a legal hurdle.²³ The resulting effect of lowering overall net prices would flatten the price structure, reduce headroom for VBC, and cause pharmaceutical companies to pull back aggressive contracts. Employer activism on drug prices would subside, and payers would be less likely to seek PVAs to justify drug selection. While value-based price benchmarks would lose their appeal, clinical recommendations from full-scope and clinical assessors would endure, since they inform coverage decisions. Political changes with the 2020 election particularly influence this scenario and would likely affect the other scenarios as well.

Conclusion

Ultimately, the interdependence of underlying trends and increasing political headwinds may lead to a hybrid outcome. We anticipate that PVA organizations grow in number, sophistication, and influence. ICER will remain the most prominent PVA organization in the near-term but will be joined by multiple, credible full-scope assessors. The number of tool providers will increase and better support diverse perspectives with customizable decision-support offerings. Full-scope and clinical assessors will continue to provide coverage and policy recommendations. PVA methodologies will start to use RWE, and some will be performed from the patient perspective.

As the U.S. market accounts for 64-78% of global pharmaceutical profits, the health of the U.S. innovation ecosystem is crucial to advancing global population health.²⁴ U.S. decision-makers need guidance about what policies will ensure that value assessments for the U.S. market will support access to today’s innovative therapies for current patients and a robust ongoing flow of innovation to serve the needs of future generations. PVA should focus on long term benefits, include patient, family, and caregiver considerations, use scientifically robust evidence, and be conducted with sound assumptions in a fully transparent manner. Thoroughly informed decision-making should include consideration of pharmaceutical value. However, informed decision-making is just one part of a wider shift to a sustainable value-based health care ecosystem.

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Jeffrey J. Lemay, JD, director, Innovation Policy Research Group, Amgen, Inc.; Harshali K. Patel, PhD, MS, previously, senior manager, Innovation Policy Research Group, Amgen, Inc.; Zachary Wessler, MBS., manager, Innovation Policy Research Group, Amgen, Inc.; Samar Malik, MBA, managing partner, Percipient, LLC.; Justin J. Piacentino, PharmD, MBA, senior manager, Percipient, LLC.